Oracle's customers a bit baffled by Fusion strategy, says report

Oracle's customers a bit baffled by Fusion strategy, says report

Summary: "Despite Oracle’s extensive marketing efforts, our survey results and our daily inquiries with Oracle customers suggest that Oracle’s strategy and road map for Oracle Fusion Applications isn’t getting through," says Forrester Research.

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Oracle customers are generally confused by the company's strategy for Fusion applications, see no strong business reasons to upgrade and are taking advantage of an "Applications Unlimited" program from 2006 to stay put for an indefinite period of time, according to a report from Forrester Research.

Forrester's advice for IT buyers:

  • Stay put, but make sure you have Fusion-compatible middleware.
  • Adopt a few Fusion modules to try out with existing applications.
  • Decouple some applications and move them to another SaaS vendor. 

Forrester's report noted:

Despite Oracle’s extensive marketing efforts, our survey results and our daily inquiries with Oracle customers suggest that Oracle’s strategy and road map for Oracle Fusion Applications isn’t getting through. Encouraged to provide multiple responses to why their firm doesn’t plan to use Oracle Fusion Applications, 60% of survey respondents said that Oracle’s app strategy was unclear, 54% said Oracle Fusion Applications weren’t mature enough, 36% cited high licensing costs, and 30% said Oracle lacks good customer references for Oracle Fusion Applications. When asked if Oracle had presented their firms with a credible plan to transition to Oracle Fusion Applications, 60% of our respondents said no, 4% said yes, 17% said they didn’t know, and 19% said they don’t plan to transition to Oracle Fusion Applications.

That confusion over Fusion is the crux of Forrester's argument that Oracle will have trouble growing application revenue. To wit:

  • 65 percent of Oracle customers in a survey with 79 respondents indicated they had no plans to upgrade to Fusion.
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  • The company's application revenues have hit weak spots over the last two years for various reasons, but the weakness has been masked by acquisitions. The bottom line is that Oracle will need to jump start Fusion demand to restore application sales. What's next for Oracle? "The current middle path of talking about Fusion while providing no disincentives against clients staying on existing apps will lead to mediocre growth. Our bet is that Oracle will push Oracle Fusion Applications," said Forrester's band of analysts.
  • Oracle's decision to offer Applications Unlimited, a program that allows customers to upgrade software running on their timelines, was a good decision in 2006 because it reassured customers. Today, that program means that few customers are on the Fusion upgrade bandwagon.
  • Oracle isn't seeing mass defections, but faces little upgrade enthusiasm. As a result, application growth is hampered going forward (unless it's masked by acquisitions).
  • Customers are generally confused by Oracle's Fusion strategy. 

Here are my takeaways from the report and a few thoughts for IT buyers:

  1. Oracle is likely to blast the Forrester report due to its sample size. I'd argue the surveys based on more than 100 respondents in the report are valuable.
  2. The argument that Applications Unlimited hampers Fusion adoption makes a lot of sense. However, Oracle's game plan isn't necessarily to sell you a lot of applications as much as it is to collect the maintenance revenue. In that revenue model, customers staying put aren’t so bad.
  3. Fifty three percent of 114 respondents in the Oracle survey used PeopleSoft followed by 45 percent with Hyperion, 41 percent with E-Business Suite and 39 percent with Oracle Siebel. We know all about Salesforce.com's business and how it was practically built on Siebel defections. The PeopleSoft percentage, however, indicates how Workday is so critical to the human capital management market. If Workday swoops in when PeopleSoft customers are eyeing Fusion or software as a service, Oracle's life gets much harder. Oracle is savvy though---it bought Taleo and has its own cloud plays. And by the way SAP bought SuccessFactors too.
  4. The end game for Oracle's application revenue growth is closer than we think. Don't dismiss Forrester's take that Oracle will step up its Fusion sales approach in attempt to push upgrades. That outcome, which is likely at some point, will accelerate customers' decision to move to Fusion or another vendor entirely.

Topics: Tech Industry, Cloud, Enterprise Software, Oracle

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7 comments
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  • Maybe it's because

    like most middleware products Oracle Fusion is a heap of over complex, ill-conceived, buzz word ridden, slow, cumbersome, unreliable junk.
    jorwell
    • it's not only customers who are confused

      I spoke to a long term Siebel consultant, leaving for a MS CRM shop, who said Fusion is jokingly referred to as CON-Fusion internally.

      CON to keep customers locked in on promises and vaporware Dems
      Confusion because even internally no one knows which bits remain viable
      hubivedder
  • JDE - Customers

    Wasn't the Fusion product suppose to bring all the JDE World customers over the fence, and into the great Oracle fold?? From what I have seen, the IBM Iseries, still lives and breaths, and the green screen world is alive and well. Oh it may be hidden behind some fancy, smancy GUI. But there are a lot of very large companies, who run their financials on the platform. So that that they have extremely reliable P/L for the financial world..
    jmd0252@...
  • Question is: why move?

    Oracle is in a tough spot here because from what I understand, the move from the legacy apps onto Fusion Apps is not a straightforward "upgrade", like you would expect from IBM, Microsoft or SAP but, rather, a complicated and expensive migration.

    This means when faced with the decision to move off e.g. PeopleSoft, customers are likely to evaluate Fusion vs Workday vs Successfactors (depending on use case).

    This is a tremendously dangerous place for Oracle to be in - none of the other ERP vendors have put themselves in this position, and SAP's ability to upgrade from almost any version of R/3 (back to version 3.1I in 1998) to the latest version, supported until the end of 2020, effectively shields them from this style of defection.

    John
    JohnMAppleby
  • Let's not get ahead of ourselves

    79 companies is hardly a sufficient sample size to glean any real value, other than to state what most people already believe to be true - Oracle's move to Fusion is going to be noisy, disruptive either be a huge success or a monumental failure. My money is on the former.

    Despite everything the author stated t the contrary, the real value lies buried at the end of the article. More than half of the respondents to the survey of 114 were PeopleSoft clients, most of whom are waiting for the release of version 9.2, which is already 6 months late. This is their last hurrah. They know it and so does Oracle; well, most of them know it. Looking at the other respondents, you can see that those who indicated they are moving to individual modules I would question the group of companies that make up the entire data set. Financials is the leading module? Not likely...CRM and HCM are the two most robust Fusion Applications available, both of which are much farther down the path than the rest. And when you add these and fast-forward those PeopleSoft subscribers, the number quickly shift to a point where Larry Ellison suddenly looks like the mad genius that he is. Just my 2 cents..
    brian.uhelski@...
  • I said as much last September

    I have been sharing with my clients and audience exactly the same insights as far back as September 2012, see my blog post, "Dead software walking: PeopleSoft 7 years after its acquisition by Oracle": http://bit.ly/OwOMee

    And I had alerted my clients about what little they could expect of Fusion even earlier, in November 2011 -> see my blog post "Error 404: Oracle Fusion not found"
    alimam
  • Peoplesoft dead? Hardly

    I am not sure where these people get their facts but Oracle is still selling Peoplesoft and as of now they have plans all the way out to 2016.
    richphx